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Using Microsoft Excel functions: 1. A machine will cost $50,000 to purchase. Annual operating cost will...

Using Microsoft Excel functions:

1. A machine will cost $50,000 to purchase. Annual operating cost will be $3,000. This machine will save $15,000 per year in labor costs. The salvage value after 5 years will be $10,000. Calculate the machine’s equivalent uniform annual worth (EUAW) for the interest rate of 8%.

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Answer #1
Year investment Annual O&M Annual savings Salvage value Net cash flow
0 -50000 -50000
1 -3000 15000 12000
2 -3000 15000 12000
3 -3000 15000 12000
4 -3000 15000 12000
5 -3000 15000 10000 22000
NPV 4718.35
EUAW 1181.74

Showing formula in excel

Year investment Annual O&M Annual savings Salvage value Net cash flow
0 -50000 =H2+I2+J2+K2
1 -3000 15000 =H3+I3+J3+K3
2 -3000 15000 =H4+I4+J4+K4
3 -3000 15000 =H5+I5+J5+K5
4 -3000 15000 =H6+I6+J6+K6
5 -3000 15000 10000 =H7+I7+J7+K7
NPV =NPV(8%,L3:L7)+L2
EUAW =PMT(8%,5,-L8)
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